TIDMCALL
RNS Number : 6310L
Cloudcall Group PLC
14 September 2021
14 September 2021
CloudCall Group plc
("CloudCall", the "Company" or the "Group")
Unaudited interim results for the six months to 30 June 2021
MORE CRM PARTNERSHIPS LAUNCHING, DOUBLING SWEET SPOT ADDRESSABLE
MARKET
REVENUE GROWTH NOW EXCEEDING OPERATING COSTS GROWTH
ON-TRACK FOR EBITDA BREAKEVEN IN MID-2023
CloudCall (AIM: CALL, OTCQX: CLLLF ), a leading cloud-based
software business that integrates communications technology into
Customer Relationship Management (CRM) platforms, is pleased to
announce its unaudited interim results for the six months to 30
June 2021.
Financial highlights
-- Total revenues up 13.4% on a constant currency basis(1)
(10.4% FX adjusted) with recurring and repeating revenues
representing 93.9% of total revenues(2) (H1 2020: 95.4%)
-- Closing annualised run-rate revenue(2) increased by 20% to GBP13.4m (H1 2020: GBP11.2m)
-- Total reported H1 revenues GBP6.4m (H1 2020: GBP5.8m)
-- Total customer numbers up 21% to 1,591 (H1 2020: 1,317)
-- Gross margin increased to 81% (H1 2020: 80%)
-- Net retention rate 100% (1H 2020: 85%)
-- Gross cash of GBP8.4m with a further GBP2m available via the
Group's existing debt facility with Shawbrook Bank and GBP1m
expected from R&D tax credits in the coming weeks
-- Adjusted EBITDA(3) loss of GBP2.56m (H1 2020: loss of
GBP1.69m) as the Group continued its' strategy to invest in those
areas that will drive future revenue growth
-- Revenue growth now starting to overtake cost growth
establishing an accelerating pattern to push the business to
break-even
Operational highlights
-- A number of CRM integrations planned for release in Q4 2021
effectively doubling the Group's addressable market from sweet spot
CRMs
-- Strong recovery in Recruitment industry driving new business
sales acceleration across the period and a strong sales pipeline
for the remainder of the year
-- SaaS metrics improving and continuing to demonstrate the
effectiveness of the CRM-based go-to-market strategy:
-- LTV:CAC > 5x
-- Lead to demo conversion rate of 30%(3) | Demo to close ratio
of 61%(3)
-- Continuing investment in product features and development
with automated SMS, call transcription functionality and a
significantly enhanced mobile-app in the pipeline
-- Investment in internal systems and processes now delivering
efficiencies within the sales, customer onboarding and account
management departments
(1) Constant currency revenue has been calculated by applying a
fixed USD:GBP exchange rate of 1.3 and AUD:GBP exchange rate of
1.92 to both 1H 2020 and 1H 2021 revenues.
(2) Recurring revenue is that related to contracted
subscription-based products. Repeating revenue is related to
pay-as-you-go (PAYG) telephony and SMS revenue which, whilst not
directly contracted, has a high degree of visibility and
predictability. Annualised run-rate revenue (ARR) = total monthly
revenues multiplied by 12 months. To account for normal monthly and
seasonal fluctuations, both the non-recurring revenue (NRR) and
PAYG income have been calculated on a rolling 6-month average for
the purposes of calculating ARR.
(3) Adjusted EBITDA represents earnings before interest, tax,
depreciation, amortisation and share based payment expenses.
(4) As measured against leads which were generated in 2020 but
closed in 2021. This is considered to provide a more accurate
representation of conversion rates as a larger proportion of 2021
leads will still be within the sales cycle.
Simon Cleaver, CEO, commented:
"I am delighted to report strong growth in line with our
expectations and that the investments we've been making are
delivering efficiencies. We have undoubtedly reached an inflection
point whereby we can scale the business whilst limiting growth in
cost, thereby allowing us reach breakeven whilst still delivering
25% growth in ARR going forward.
Our product and development teams continue to do a great job of
delivering exciting new features and the automated SMS and
transcription services when fully live will lead to considerable
upsell opportunities. The way that both services tightly integrate
with our partners CRMs has many benefits for customers over similar
services that don't integrate, increasing CloudCall's desirability
and driving growth.
Continuing with our strategy of adding more CRMs to fuel this
growth, I'm excited that the CRM launches announced today fit our
"sweet spot" partner definition where we've had proven success.
Collectively, they more than double our addressable market from
"sweet-spot" CRMs which underpins our belief in delivering future
growth.
This afternoon's webinar will allow me to share more detail on
all of this and I look forward to speaking to investors later
today."
For further information, please contact:
CloudCall Group plc Tel: +44 (0)20 3587
Simon Cleaver, Chief Executive Officer 7188
Paul Williams, Chief Financial Officer
Canaccord Genuity Limited (Nominated Tel: +44 (0)20 7523
Adviser & Broker) 8000
Simon Bridges
Richard Andrews
Thomas Diehl
The information contained within this announcement is deemed to
constitute inside information as stipulated under the Market Abuse
Regulation (EU) No 596/2014. Upon the publication of this
announcement, this inside information is now considered to be in
the public domain.
About CloudCall Group Plc
CloudCall is a software and integrated communications business
that has developed and provides a suite of cloud-based software and
communications products and services. CloudCall's products and
services are aimed at enabling organisations to leverage their
customer data to enable more effective communications and improve
performance.
The CloudCall suite of software products allows companies to
fully integrate telephony, messaging and contact centre
capabilities into their existing customer relationship management
(CRM) software, enabling communications to be made, recorded,
logged and categorised from within the CRM system with detailed
activity reporting and powerful business intelligence capable of
being easily generated.
Investor Meet Company webinar
The Company will also be hosting a live investor presentation
relating to the interim results and to provide a trading update via
the Investor Meet Company platform on 14 September 2021 at 16:00
BST.
The presentation is open to all existing and potential
shareholders. Questions can be submitted pre-event via your
Investor Meet Company dashboard up until 9:00 BST the day before
the meeting or at any time during the live presentation.
Investors can sign up to Investor Meet Company for free and add
to meet CloudCall Group Plc via:
https://www.investormeetcompany.com/cloudcall-group-plc/register-investor
Investors who already follow CloudCall Group plc on the Investor
Meet Company platform will automatically be invited.
Chief Executive's review
Introduction and operational highlights
2020 was a challenging year for CloudCall and many of our
customers, however, I am pleased to say that this seems firmly
behind us, and the business is once again thriving. What is more,
the Group has now reached an inflection point with revenue growth
running in excess of growth in operating costs thus underpinning
our drive towards EBITDA break-even and future profitability.
The recruitment sector, which represents over 50% of our
revenues, has bounced back at an astonishing rate and sales to new
customers have been accelerating throughout Q1 and Q2. In addition
to this, we have also witnessed considerable growth from our
existing customer base who have been increasing the services they
buy from us. Many of our KPI's are now running well above
pre-COVID-19 levels which demonstrates the effectiveness of the
Group's CRM based go-to-market strategy and the relevance of the
Group's product offering in today's distributed working
environment.
I remain as passionate as ever about the value of CloudCall's
services to our customers and the efficient way we reach those
customers. The strong lead conversion rates and other compelling
SaaS metrics we are consistently achieving only increases my belief
that we are in the right market with the right product at the right
time. With a strong growth strategy centred on increasing our
addressable market, delivering new product features and increasing
internal efficiencies and scalability, I remain hugely excited for
what CloudCall can achieve.
Our growth strategy
CloudCall's growth strategy is very simple. We know from our
current performance that our unique CRM-based product and
partner-led go-to-market strategy is effective, as evidenced from
our strong lead conversion metrics. Delivering strong revenue
growth and ultimately profitability is a matter of 3 things.
Firstly, increasing our addressable market by launching more CRM
integrations and working with our new CRM partners to generate good
quality lead-flow from their customers.
Secondly, continuing to deliver exciting and relevant new
product enhancements that continue to bring tangible benefits to
our customers, allowing us to increase existing customer revenues
and continue to deepen our penetration with existing partners.
Finally, improving our internal systems and processes to enable
us to scale up and deliver strong revenue growth without having to
increase operating costs accordingly. These efficiencies are vital
to enable us to deliver strong revenue growth with much lower
levels of cost growth.
CRM systems continue to be at the centre of everything that we
do as it is our belief that communications are significantly more
effective when driven by the data a business holds about its
customers and prospects. We believe that this approach is a key
differentiator for the Group as our software provides customers
with both an integrated communications solution and a powerful tool
for extracting more value from their CRM systems. An integrated
multi-channel communications system such as CloudCall can utilise
data stored in the CRM to improve communications workflows, as well
as providing reporting and analytical capabilities to drive
efficiencies and generate insights for improving performance.
Identifying key information from within these communications and
then pulling that back into the CRM in the right places enables
customer knowledge to be captured that might otherwise have been
lost.
The deep focus on CRM integrations and the strengthening of
relationships with CRM partners underlies the Group's go-to-market
strategy and this continues to deliver strong lead to demo and demo
to close ratios. A key element of the Group's growth strategy is
therefore focused on increasing the number of CRM partner
relationships. There is a vast and ever-growing number of CRM
systems in global circulation and the business is continually
assessing them in order to identify those CRMs and vendors which
meet CloudCall's criteria for providing a successful partnership.
We refer to these as our "sweet spot" CRM partners. I am pleased to
report that excellent progress has been made on this front with a
number of new sweet spot CRM integrations planned for release in Q4
2021, effectively doubling the Group's addressable market of users
from sweet spot CRMs. Given the Group's track record of strong lead
conversion from these CRMs, this increase in addressable market is
anticipated to drive a further uplift in sales volumes thus
supporting FY 2022 growth targets.
Product development drives upsell opportunities, increases
revenue per customer and improves retention rates
During 2021 so far, the Group has continued to invest in its
underlying product offering with significant development being
undertaken to enhance existing functionality as well as generating
new features which will ultimately provide upsell
opportunities.
Since launching our SMS messaging service, take-up has
consistently increased with usage growth increasing by 250% in 2021
alone. Messaging is becoming an increasingly important part of any
communications mix and the business has dedicated a large amount of
resource into developing and improving our SMS product.
Going forward, our recently launched SMS automation features
will provide customers with even greater opportunities for
efficiency and improved customer engagement that can only come from
harnessing the intelligence held within the CRM and communications.
Now CloudCall users can set rules and events that will
automatically trigger SMS messaging according to filed values in
their CRM, and this opens up a raft of compelling use cases, not
only for companies in recruitment and property sectors, but all our
customers. Due to CloudCall's unique architecture, we will be able
to quickly deploy this new functionality across the majority of our
CRM integrations in due course.
Finally, we anticipate that our new mobile-app will be launched
in Q4 of this year providing an enhanced service and greater
functionality for our customers, including the ability for users to
access much more of CloudCall's CRM integrated capability directly
from their mobile phone.
Efficiency gains provide a pathway to more profitable growth and
EBITDA break-even
As well as investing within our external product offering, the
business has continued with its programme to overhaul and improve
internal systems and processes. I am pleased to report that this
investment is now starting to pay off with planned efficiency
savings in sales, onboarding and account management processes
starting to feed through. As time-consuming processes become more
automated, the teams can focus more of their time on customer
relationships and sales opportunities thus driving revenue
generation without an associated uplift in costs. In addition to
this, development work is being undertaken to support reduced touch
customer onboarding which will increase the Group's ability to
provision a greater volume of new customers for any given size of
provisioning team.
These internal solutions provide cost-efficient scalability
allowing the Group to grow revenues whilst minimising associated
operating costs growth.
People
I was saddened to see the recent departure of Paul Clark as CTO.
Having come in and made a significant contribution to CloudCall
during the last 18 months, Paul has departed to pursue a
once-in-a-lifetime opportunity with one of the large US investment
banks. However, due to the quality of the team Paul has built and
the quality of the work already underway we are delighted to
announce that Paul's replacement(s) are in-house promotions, with
Diogo Coutinho stepping up to the role of Chief Product Officer and
Klaas Ardinois stepping into the CTO role alongside him. The
Company is delighted with this outcome, and we are very excited to
see Diogo and Klaas pick up the mantel from Paul.
Once again, I would like to take this opportunity to thank all
our staff for their extraordinary work and ongoing commitment.
Revenue, customer growth and retention rates
The relative strength of the dollar compared to the same period
last year has adversely impacted the 40% of Group revenues
generated in that currency when converting back to reporting
currency (GBP). When looking at revenue growth on a constant
currency basis, total revenues are 13.4% higher than the same
period last year and recurring and repeating revenues grew by 11.6%
over the same period.
Total reported revenues for the six-month period were GBP6.4
million, representing an increase of 10.4% against H1 2020, whereas
recurring and repeating revenue grew by 8.7%, to GBP6.0m, when
compared to the same period. The lower relative increase in
recurring revenue is indicative of increased new business sales
with corresponding one-off fees for set-up etc. We are also seeing
an increase in SMS and telecoms traffic whose income is classed as
'repeating revenue'.
Improving economic conditions, and in particular the strong
bounce back of the recruitment sector, has led to a significant
acceleration in new business sales with customer numbers growing by
21% from H1 2020. New business sales in Q2 were 30% higher than Q1
and sales to the existing customer base followed the same trend
with Q2 upsells 57% higher than Q1. This increased sales activity
is expected to feed through to revenue across H2 and into FY 2022
as these services go live. Overall, sales with a year one value of
over GBP2.5m were booked in H1 2021, up 66% on H1 2020. This strong
performance has seen annualised run-rate revenue increase to
GBP13.4m as at the end of H1 2021 representing growth of 25% on a
constant currency basis or 20% on an actual basis.
Historically, net retention rates have run at over 100%. The
temporary relief given to customers during 2020 depressed this
number, however, I am pleased to report that net retention rates
have now recovered to just over 100%. As the Group continues to
invest in new product features and internal customer management
systems, we are fully focused on driving up retention rates and
maximising revenues from our existing customer base.
Cash
Having raised gross proceeds of GBP7.5m via a share placing and
secured an updated GBP5.0m debt facility with Shawbrook in March
2021, the Group reports GBP8.4m of gross cash at the end of the
half-year (Net cash excluding lease liabilities of GBP5.5m), with a
further GBP2.0m available through its' existing GBP5.0m debt
facility. A further GBP1m is expected from R&D tax credits in
the coming weeks.
Outlook
The Group remains in a strong position with a positive first
half of the year and excellent future growth prospects. The Board
is therefore confident in delivering its underlying revenue
guidance for FY 2021 and FY 2022, albeit, reported revenue is
likely to be impacted by the ongoing USD:GBP headwind which
continues to impact us in 2021. The Board is also pleased to
announce that, whilst the Group has continued to invest within its
overall growth strategy, expenditure has been carefully controlled
and thus it is anticipated that operating expenditure and the
overall EBITDA loss for FY 2021 will be slightly lower than
previous guidance. The Board reiterates its' intention to reach
monthly EBITDA break-even by mid-2023.
Simon Cleaver
Chief Executive Officer
CloudCall Group plc
14 September 2021
Key performance indicators
Following the review of published KPIs announced earlier this
year, the Company has decided to remove its user-based KPIs from
external reporting and replace them with customer-based KPIs.
Customers often have a mixture of VoIP accounts, SMS accounts,
campaign accounts, automated communication accounts, plus an
increasing proliferation of home, mobile and work accounts as
remote working patterns have changed. As a consequence, we have
been steadily moving away from the principal that a typical
CloudCall 'user' account is a direct match to a human being or a
'bum on a seat'. Reporting on numbers of customers rather than
users is simpler, removes any possible confusion and will not be
affected by potential further 'user' growth as the product evolves
towards more automation and reseller channel-driven revenues.
Our 'users' KPIs have also always included any signed users
waiting to go live which can become distortive if larger customers
delay their roll out plans. For simplicity and clarity, future
reporting of customer numbers will exclude any awaiting go-live and
will only include customers that are already billing.
This means that 'number of customers' multiplied by 'annualised
revenue (ARR) per customer' should closely approximate to our
reported 'annualised run-rate'.
In the interests of transparency, user numbers as calculated
under the previous method would have been 51,966 as of 30 June
2021, an increase of 19% compared to the same point last year.
Recurring revenue per user (RRPU) for H1 2021 was GBP26.20, which
is in-line with the same period last year.
Key Performance Indicators (KPIs)
KPI Link to strategic goals 6 months 6 months Growth
to 30 to 30 vs H1
Jun 2021 Jun 2020
2020
------------------------------------------- ------------ ----------- --------
Growth in revenues, and particularly
recurring revenues, demonstrates
effective and targeted new
customer acquisition and greater
upsell and retention from existing
customers. Quality and focus
within key account and relationship
management, service delivery
and customer support, drives
more efficient implementation,
reduces churn and improves
customer satisfaction, all
of which are
Revenue revenue enhancing. GBP6.41m GBP5.81m 10.4%
------------------------------------------- ------------ ----------- --------
High gross margins within the
Group's operating units are
indicative of focus on multiple
drivers, including:
- delivering higher value implementation
services
- an effective mix of pre-paid
vs pay-as-you-go telephony
- effective partner management
- effective discount management
- additional chargeable features
and services and
- better procurement from upstream
Gross Margin telecoms partners. 81.2% 80.2% 1.0%
------------------------------------------- ------------ ----------- --------
For a SaaS business that is
investing in new product, sales
and marketing infrastructure,
and other improvements to enable
it to scale up, periods of
investment in the business
will take operating expenses
higher from the point which
that investment takes place
EBITDA Loss until revenue returns begin
(Loss from to come through. The Group
operating is continuing to focus on revenue
activities growth initiatives during 2021
before depreciation, and it should be noted that
amortisation H1 2020 EBITDA benefited from
and share-based a number of COVID-19 related
payment charges) cost savings and grant receipts. (GBP2.56m) (GBP1.69m) (51.3%)
------------------------------------------- ------------ ----------- --------
Losses and ultimately profits
are reflective of policies
focused on revenue growth,
cost of sales efficiencies
and operating expenditure containment
or expansion depending on whether
the Group is investing for
growth or managing itself towards
profitability. Depreciation,
amortisation, share-based payments,
financing costs, taxation and
other one-time non-operating
Net Loss costs will also impact bottom-line
after Tax profitability. (GBP3.50m) (GBP2.14m) (63.1%)
------------------------------------------- ------------ ----------- --------
KPIs (continued)
KPI Link to strategic goals 6 months 6 months Growth
to 30 to 30 vs H1
Jun 2021 Jun 2020
2020
----------------------------------------- ----------- ----------- ---------
Cash outflow from operating activities
typically reduces as
revenues outgrow operating costs.
However, it should be
noted that periods of investment
to facilitate further
growth will temporarily increase
cash burn until revenue
growth catches up. The Group has
Net Cash now reached an inflection point
outflow and thus cash outflows are anticipated
from Operating to start reducing as revenue growth
Activities feeds through. (GBP3.13m) (GBP1.33m) (136%)
----------------------------------------- ----------- ----------- ---------
Cash and The Group needs to ensure that GBP8.45m GBP8.32m GBP0.13m
Cash Equivalents it has enough cash
reserves to support its operations
through to break-even
at which point it becomes cash
generative and self-funding. Cash
balances need to be considered
in the
context of any debt that may mature
in future periods.
----------------------------------------- ----------- ----------- ---------
Customer numbers exclude any awaiting
go-live and thus only include
customers that are already billing.
Growth in customer numbers is
Customer indicative of strong sales activity
numbers and successful customer retention. 1,591 1,317 20.8%
----------------------------------------- ----------- ----------- ---------
The initial shock waves of the
global COVID-19 pandemic
materially slowed sales to larger
prospects and increased
Closing churn levels. This significantly
monthly impacted closing MRR in H1 2020.
recurring During 2021, sales levels have
revenue materially increased resulting
(MRR) in strong MRR growth. GBP970k GBP799k 21.4%
----------------------------------------- ----------- ----------- ---------
Annualised run-rate revenue (ARR)
is calculated as total closing
monthly revenues multiplied by
12 months. In order to account
for normal monthly and seasonal
fluctuations, both the non-recurring
Annualised revenue (NRR) and pay-as-you-go
run-rate communications (PAYG) income are
revenue calculated on a rolling 6-month
(ARR) average. GBP13.37m GBP11.18m 19.5%
----------------------------------------- ----------- ----------- ---------
KPIs (continued)
KPI Link to strategic goals 6 months 6 months Growth
to 30 to 30 vs H1
Jun 2021 Jun 2020
2020
-------------------------------------------- ---------- --------- -------
Growth in annualised revenue per
customer is indicative of both
the Group's strategy to focus
on acquisition of larger customers
and increasing upsells to existing
customers. The weakness of the
dollar compared to the same period
last year has adversely impacted
Annualised this KPI. On a constant currency
revenue basis, ARR per customer has actually
(ARR) per increased by 3.5% compared to
customer H1 2020. GBP8,401 GBP8,490 (1.0%)
-------------------------------------------- ---------- --------- -------
Whilst non-recurring sales streams
still constitute an important
part of overall revenue, a high
% of recurring and repeating revenue
is key for the Group as, when
combined with strong net retention
rates, it provides management
% of recurring and stakeholders with strong visibility
or repeating and confidence over future revenue
revenue performance. 93.9% 95.4% (1.5%)
-------------------------------------------- ---------- --------- -------
Net retention rate is the rate
at which customers are
renewing and expanding. Improving
net renewal rates and minimising
customer churn is key to long
term success in an annuity revenue
business and the Group continues
to focus on providing the highest
standards of customer service
and support to increase customer
satisfaction levels and potential
upsell opportunities. The onset
of COVID-19 significantly impacted
this metric in H1 2020 as it led
to delayed investment from existing
customers and a spike in churn
as some customers encountered
financial difficulties. As economic
conditions have improved, the
net renewal rate has steadily
Net retention recovered and is now back to pre-COVID
rate (NRR) levels. 100.2% 85.1% 15.1%
-------------------------------------------- ---------- --------- -------
The LTV:CAC ratio measures the
relationship between the
lifetime value of a customer,
and the cost of acquiring that
customer. The metric is a signal
of customer profitability, and
of sales and marketing efficiency.
The H1 2020 comparative was significantly
impacted by the onset of the COVID-19
pandemic as temporary billing
relief was offered to customers.
Lifetime During 2021, the Group has continued
value: to invest within its sales & marketing
customer divisions and has maintained a
acquisition strong LTV:CAC ratio which is
costs reflective of the efficient go
(LTV:CAC) to market strategy. 5.3 1.5 246.7%
-------------------------------------------- ---------- --------- -------
Financial review
Revenue
Revenues grew by 10.4% from GBP5.8m to GBP6.4m in H1 2021
The Group started the year well with a strong sales pipeline and
significant momentum generated from the "V-shaped" COVID recovery
in H2 2020. As anticipated, the bounce back in the recruitment
sector saw an acceleration in new business sales with customer
numbers at the period-end now 21% higher than H1 2020. New business
sales in Q2 were 30% higher than in Q1 and sales to the existing
customer base followed the same trend with Q2 upsells 57% higher
than Q1. This increased sales activity is expected to feed through
to revenue across H2 and into FY 2022 as these services go
live.
Whilst total revenue and recurring revenue has grown by 10.4%
and 8.8% respectively compared to H1 2020, reported revenue for the
period was significantly impacted by the weakening of the US dollar
against the Group's reporting currency (GBP). The relative strength
of the dollar compared to the same period last year has adversely
impacted the 40% of Group revenues generated in that currency, and
when looking at revenue growth on a constant currency basis, total
revenues are actually 13.4% higher than the same period last year
and recurring and repeating revenues grew by 11.6%.
Over the full six-month period, an average of 19 net new
customers was added each month taking the total number of customers
to 1,591 (an increase of 21% against H1 2020). This growth in
customer numbers, when combined with strong upsells to the existing
customer base, has driven growth in the Group's annualised run-rate
revenue with ARR reaching GBP13.4m at the period-end (An increase
of 20% compared to H1 2020). With net retention rates having
recovered to 100%+, the Group expects to see a continued expansion
in ARR during H2 2021 creating significant future value.
Gross margin
Gross margin increased from 80.2% for the corresponding period
in 2020 to 81.2% in H1 2021
Gross margin increased in H1 2021 mainly due to the lower
proportion of hardware sales as a percentage of overall revenue.
Non-recurring revenue from hardware reselling is highly competitive
and thus attracts significantly lower margins than the Group's
other revenue streams.
Operating costs (excluding depreciation, amortisation and
share-based payments)
Operating costs grew from GBP6.4m in H1 2020 to GBP7.8m in H1
2021
Whilst operating costs have grown as expected by 22% compared to
the same period last year, this should be viewed within the context
of the significant COVID related savings which were made in H1
2020. In H1 2020, when the impact of the growing COVID-19 pandemic
became clear, management implemented a number of temporary
cost-cutting measures with the Group also benefiting from both UK
and US grant funding. These savings meant that H1 2020 costs were
circa GBP0.6m lower than would otherwise have been the case. Within
this context, growth in underlying operating costs is more akin to
12% as the Group continued to invest in sales, marketing and
development to support future growth.
We are now starting to see the benefits of these growth
initiatives with the Group reaching an inflection point where
revenue growth has started to exceed growth in operating costs thus
underpinning our drive towards EBITDA break-even and future
profitability.
Research and development expenditure is shown in the financial
statements net of the amount qualifying for re-classification to
the statement of financial position under IAS 38 (Capitalisation of
Software Development Costs). In H1 2021 this amounted to GBP1,321k
(H1 2020: GBP750k).
Losses from operating activities before depreciation,
amortisation and share-based payments were (GBP2.56m), up 51% from
(GBP1.69m) in H1 2020.
Research and development costs
Development costs capitalised in H1 2021 GBP1.32m (H1 2020:
GBP0.75m)
The Group is committed to developing relevant new products,
services and features to ensure that current and future customers
can benefit from an exceptional value-adding experience. To that
end, the Group continues to invest in product development and
continued to adopt the accounting treatment set out in IAS 38
(Intangible Assets) for the ongoing capitalisation of research and
development costs through H1 2021. Further to the adoption of IAS
38, the Group confirms that, as a result of new products coming
into service since the adoption of the policy, IAS 38 related
amortisation charged in H1 2021 was GBP790k (H1 2020: GBP240k).
Debt and financing expenses
The Group had outstanding debt, including IFRS 16 lease
liabilities, of GBP5.3m as at 30 June 2021 (H1 2020: GBP3.0m) and a
net financing expense of GBP179k (H1 2020: GBP114k).
In April 2021 the Group replaced its previous loan facility with
Shawbrook Bank with a new GBP5.0m facility. The Group drew down an
initial balance of GBP3.0m having repaid the previous facility in
March 2021. The GBP2.0m undrawn element is available for draw down
before April 2022 subject to covenants adherence. Interest is
charged at 9.75% plus the higher of either LIBOR (In the future
SOFR) or 0.5% per annum.
Other borrowings constitute the Group's lease liabilities
accounted for in accordance with IFRS 16. In order to support the
growth of US operations, in June 2021, the Group replaced its
office premises in Boston (USA) entering into a new 4-year and 4
months lease. This transaction has resulted in the recognition of a
lease liability of GBP1,009k and a right of use asset of
GBP1,061k.
Cash and working capital
The Group had GBP8.4m cash at the end of the period (H1 2020:
GBP8.3m).
The Group's balance sheet includes an R&D tax credit
receivable of GBP1.63m (H1 2020: GBP0.45m) with GBP1.04m expected
to be received within the coming weeks.
Share capital
Total issued share capital at the period-end comprised
48,029,216 ordinary shares of 20 pence each.
On 26 March 2021, the company allotted and issued 5,521,472
ordinary shares under an EIS/VCT share placing at a price of 81.5
pence per share. On 29 March, a further 3,680,981 ordinary shares
were allotted and issued under a share placing at a price of 81.5
pence per share. The total monies raised of GBP7.5m before costs
will allow the Group to strengthen its balance sheet and pursue the
Growth Strategy.
Earnings per share and dividends
Loss per share for the half year period was 8.0 pence (H1 2020:
5.5 pence)
By order of the board
Simon Cleaver Paul Williams
Chief Executive Officer Chief Financial Officer
Consolidated Statement of Comprehensive Income
For the 6 months ended 30 June 2021
Unaudited Unaudited Audited
Six months Six months Year ended
ended 30 ended 30 31 December
June 2021 June 2020 2020
Notes GBP000 GBP000 GBP000
Revenue 6,412 5,807 11,820
Cost of sales (1,206) (1,149) (2,279)
--------------- -------------- --------------------
Gross profit 5,206 4,658 9,541
Sales & marketing expenses (2,150) (1,754) (3,769)
Administrative expenses (4,643) (3,641) (8,552)
Research & development
expenses (976) (957) (1,578)
---------------------------------- ------ --------------- -------------- --------------------
Operating loss before
depreciation, amortisation
and share-based payment
charges (2,563) (1,694) (4,358)
Depreciation and amortisation (1,245) (671) (1,649)
Share-based payment charges (120) (161) (412)
Operating loss (3,928) (2,526) (6,419)
Finance expense (179) (114) (325)
--------------- -------------- --------------------
Loss before tax (4,107) (2,640) (6,744)
Taxation 3 611 497 998
--------------- -------------- --------------------
Loss for the period attributable
to owners of the parent (3,496) (2,143) (5,746)
Other comprehensive income
Items that may be subsequently
reclassified to profit
or loss:
Exchange differences on
translation of foreign
operations 36 (65) (34)
Other comprehensive income 36 (65) (34)
Total comprehensive income
for the period attributable
to owners of the parent (3,460) (2,208) (5,780)
--------------- -------------- --------------------
Loss per share 5 Pence Pence Pence
Basic and fully diluted
loss per share 5 (8.0) (5.5) (14.8)
Consolidated Statement of Financial Position
At 30 June 2021
Unaudited Unaudited Audited
Six months Six months Year ended
ended 30 ended 31 December
June 2021 30 June 2020
2020
Notes GBP000 GBP000 GBP000
Non-current assets
Property, plant and equipment 3,070 2,776 2,274
Goodwill 4 339 339 339
Other intangible assets 4 4,607 3,502 4,076
----------- ----------- -------------
8,016 6,617 6,689
Current assets
Trade and other receivables 3,248 2,847 2,779
Research and development
tax
credit receivable 1,625 450 1,000
Cash and cash equivalents 8,449 8,319 5,676
----------- ----------- -------------
13,322 11,616 9,455
Total assets 21,338 18,233 16,144
----------- ----------- -------------
Current liabilities
Borrowings (1,289) (642) (1,044)
Trade and other payables (2,240) (1,980) (2,388)
----------- ----------- -------------
(3,529) (2,622) (3,432)
Non-current liabilities
Borrowings (4,028) (2,383) (2,696)
Provisions for liabilities (144) - (91)
Total liabilities (7,701) (5,005) (6,219)
----------- ----------- -------------
Net assets 13,637 13,228 9,925
----------- ----------- -------------
Equity attributable to
shareholders
Share capital 9,606 7,754 7,763
Share premium 82,310 77,092 77,101
Translation reserve 40 (27) 4
Warrant reserve 29 29 29
Retained earnings (78,348) (71,620) (74,972)
Total equity attributable
to shareholders 13,637 13,228 9,925
----------- ----------- -------------
Consolidated Statement of Changes in Equity
For the six months ended 30 June 2021
Share Share Translation Warrant Retained Total equity
capital premium reserve reserve earnings attributable
account to shareholders
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Balance
at 1 January
2020 7,751 77,085 38 29 (69,638) 15,265
Loss for
the period - - - - (2,143) (2,143)
Other comprehensive
income:
Exchange
differences
on translation
of foreign
operations - - (65) - - (65)
--------- --------- -------------- --------- ---------- -----------------
Total comprehensive
income for
the period - - (65) - (2,143) (2,208)
Transactions
with owners
recognised
in equity:
Equity settled
share-based
payments - - - - 161 161
Issue of
equity shares 3 7 - - - 10
Issue costs
of equity
shares - - - - - -
--------- --------- -------------- --------- ---------- -----------------
Total transactions
with owners
recognised
in equity 3 7 - - 161 171
--------- --------- -------------- --------- ---------- -----------------
Balance
at 30 June
2020 7,754 77,092 (27) 29 (71,620) 13,228
--------- --------- -------------- --------- ---------- -----------------
Share Share Translation Warrant Retained Total equity
capital premium reserve reserve earnings attributable
account to shareholders
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Balance
at 1 July
2020 7,754 77,092 (27) 29 (71,620) 13,228
Loss for
the period - - - - (3,603) (3,603)
Other comprehensive
income:
Exchange
differences
on translation
of foreign
operations - - 31 - - 31
--------- --------- ------------ --------- ---------- -----------------
Total comprehensive
income for
the period - - 31 - (3,603) (3,572)
Transactions
with owners
recognised
in equity:
Equity settled
share-based
payments - - - - 251 251
Issue of
equity shares 9 19 - - - 28
Issue costs
of equity
shares - (10) - - - (10)
--------- --------- ------------ --------- ---------- -------------------
Total transactions
with owners
recognised
in equity 9 9 - - 251 269
--------- --------- ------------ --------- ---------- -------------------
Balance
at 31 December
2020 7,763 77,101 4 29 (74,972) 9,925
--------- --------- ------------ --------- ---------- -------------------
Share Share Translation Warrant Retained Total equity
capital premium reserve reserve earnings attributable
account to shareholders
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Balance
at 1 January
2021 7,763 77,101 4 29 (74,972) 9,925
Loss for
the period - - - - (3,496) (3,496)
Other comprehensive
income:
Exchange
differences
on translation
of foreign
operations - - 36 - - 36
--------- --------- ------------ --------- ---------- -----------------
Total comprehensive
income for
the period - - 36 - (3,496) (3,460)
Transactions
with owners
recognised
in equity:
Equity settled
share-based
payments - - - - 120 120
Issue of
equity shares 1,843 5,672 - - - 7,515
Issue costs
of equity
shares - (463) - - - (463)
--------- --------- ------------ --------- ---------- -----------------
Total transactions
with owners
recognised
in equity 1,843 5,209 - - 120 7,172
--------- --------- ------------ --------- ---------- -----------------
Balance
at 30 June
2021 9,606 82,310 40 29 (78,348) 13,637
--------- --------- ------------ --------- ---------- -----------------
Consolidated Cash Flow Statement
For the 6 months ended 30 June 2021
Unaudited Unaudited Audited
Six months Six months Year ended
ended 30 ended 30 31 December
June 2021 June 2020 2020
GBP000 GBP000 GBP000
Cash flows from operating
activities
Loss for the period after
tax (3,496) (2,143) (5,746)
Adjustments for:
Depreciation and amortisation 1,245 671 1,649
Foreign exchange losses/(gains)
on operating activities 102 (191) 8
Financial expenses 179 114 325
Equity settled share-based
payment expenses 120 161 412
Taxation (611) (497) (998)
Operating loss before changes
in working capital (2,461) (1,885) (4,350)
(Increase)/decrease in trade
and other receivables (441) 41 17
(Decrease)/increase in trade
and other payables (215) (289) 202
Cash outflow from operations (3,117) (2,133) (4,131)
Tax (paid)/received (14) 807 811
Net cash outflow from operating
activities (3,131) (1,326) (3,320)
Cash flows from investing
activities
Acquisition of property,
plant and equipment (173) (474) (663)
Development expenditure capitalised (1,321) (750) (1,850)
Net cash outflow from investing
activities (1,494) (1,224) (2,513)
Cash flows from financing
activities
Repayment of lease liability (329) (266) (542)
Interest paid (114) (36) (161)
Net proceeds from the issue
of share capital 7,052 10 28
Proceeds from new loans 3,031 109 1,609
Repayment of loans (2,286) (80) (441)
Net cash inflow/(outflow)
from financing activities 7,354 (263) 493
Net increase/(decrease) in
cash and cash equivalents 2,729 (2,813) (5,340)
Cash and cash equivalents
at start of the period 5,676 11,101 11,101
Effect of exchange rate fluctuations
on cash held 44 31 (85)
Cash and cash equivalents
at end of period 8,449 8,319 5,676
----------- ----------- -------------
Consolidated Movement in Net Cash/(Debt)
For the 6 months ended 30 June 2021
Interest on Exchange and
lease New lease other non-cash At 30 June
At 1 January 2020 Cash flow liabilities liabilities movements 2020
Group GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------ ----------------- --------- ---------------- ----------------- ---------------- ----------
Cash and cash
equivalents 11,101 (2,813) - - 31 8,319
Bank loans (973) (30) - - - (1,003)
Lease liabilities (1,406) 266 (78) (775) (29) (2,022)
------------------- ----------------- --------- ---------------- ----------------- ---------------- ----------
Net cash at end of
period 8,722 (2,637) (78) (775) 2 5,294
------------------- ----------------- --------- ---------------- ----------------- ---------------- ----------
Interest on Exchange and
At 30 June lease New lease other non-cash At 31 December
2020 Cash flow liabilities liabilities movements 2020
Group GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------ ---------- --------- ---------------- ----------------- ---------------- -----------------
Cash and cash
equivalents 8,319 (2,527) - - (116) 5,676
Bank loans (1,003) (1,151) - - - (2,154)
Lease liabilities (2,022) 276 (74) - 233 (1,587)
------------------- ---------- --------- ---------------- ----------------- ---------------- -----------------
Net cash at end of
period 5,294 (3,402) (74) - 117 1,935
------------------- ---------- --------- ---------------- ----------------- ---------------- -----------------
Interest on Exchange and
lease New lease other non-cash At 30 June
At 1 January 2021 Cash flow liabilities liabilities movements 2021
Group GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------ ----------------- --------- ---------------- ----------------- ---------------- ----------
Cash and cash
equivalents 5.676 2,729 - - 44 8,449
Bank loans (2,154) (747) - - - (2,901)
Lease liabilities (1,587) 329 (65) (1,009) (84) (2,416)
------------------- ----------------- --------- ---------------- ----------------- ---------------- ----------
Net cash at end of
period 1,935 2,311 (65) (1,009) (40) 3,132
------------------- ----------------- --------- ---------------- ----------------- ---------------- ----------
Notes to the Financial Statement
1. Accounting policies and basis for preparation
The condensed consolidated interim financial information for the
six months ended 30 June 2021 has been prepared in accordance with
the presentation, recognition and measurement requirements of
applicable International Financial Reporting Standards adopted by
the European Union ('IFRS') except that the Group has not applied
IAS 34, Interim Financial Reporting, which is not mandatory for UK
Groups listed on AIM.
The financial information does not include all of the
information required for full annual financial statements and
should be read in conjunction with the financial statements of the
Group for the year ended 31 December 2020 which are prepared in
accordance with UK-adopted International Accounting Standards.
The accounting policies applied in the condensed consolidated
interim financial information for the six months ended 30 June 2021
are the same as those applied in the Group's consolidated financial
statements as at and for the year ended 31 December 2020.
The Group's 2020 annual report provides full details of
significant judgements and estimates used in the application of the
Group's accounting policies. There have been no significant changes
to these judgements and estimates during the period.
The financial information included in this document is unaudited
and does not comprise statutory accounts within the meaning of
section 434 of the Companies Act 2006. The comparative figures for
the financial year ended 31 December 2020 are the Group's statutory
accounts for that financial year. Those accounts have been reported
on by the company's auditor and delivered to the registrar of
companies. The report of the auditor was (i) unqualified, (ii) did
not include a reference to matters to which the auditor drew
attention by way of emphasis without qualifying their report, and
(iii) did not contain a statement under section 498 (2) or (3) of
the Companies Act 2006.
2. Going concern
The Group made a loss of GBP3,496k in the six months ended 30
June 2021 and, as at 30 June 2021, had net cash reserves excluding
lease liabilities of GBP5,548k.
The Directors have prepared detailed cashflow projections
covering the period up to December 2024. Such forward looking
projections are inevitably subjective and sensitive to changes in
the underlying assumptions and the Directors have sensitised these
projections accordingly, in particular to factor in a delay in the
growth of revenue. These projections, as sensitised, indicate that,
based on the assumptions underlying the projections, additional
equity funding within the next 12 months and continued support from
the Group's lenders will be required in order to ensure the
long-term future of the business. Given the Group's strong track
record of successful fund raises and the continuing positive
relationship it enjoys with its lenders, the Directors are highly
confident that the Group will be able to secure the necessary
funds.
Accordingly, the Directors have a reasonable expectation that
the Group will have access to adequate resources to continue in
operational existence for the foreseeable future and thus have
adopted the going concern basis of accounting in preparing these
interim financial statements.
3. Taxation
Recognised in the Consolidated Statement of Comprehensive Incom
e
Unaudited Unaudited Audited
Six months Six months Year ended
ended ended 31 December
30 June 30 June 2020
2021 2020 GBP000
GBP000 GBP000
Current income tax
Overseas income tax charge
for the current year (14) (4) (3)
Current year research and development
tax credit 625 450 1,000
Adjustments in respect of prior
periods - 51 1
----------- ----------- ------------
611 497 998
Total tax credit recognised
in the current period 611 497 998
----------- ----------- ------------
4. Intangible assets
Goodwill Patents Acquired Software Total
& trademarks IPR development
costs
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cost
Balance at 1 January
2020 339 12 1,448 3,641 5,440
Additions - - - 750 750
--------- -------------- --------- ------------- --------
Balance at 30
June 2020 339 12 1,448 4,391 6,190
Additions - - - 1,100 1,100
--------- -------------- --------- ------------- --------
Balance at 31
December 2020 339 12 1,448 5,491 7,290
Additions - - - 1,321 1,321
Balance at 30
June 2021 339 12 1,448 6,812 8,611
--------- -------------- --------- ------------- --------
Amortisation
Balance at 1 January
2020 - (12) (1,448) (649) (2,109)
Amortisation for
the period - - - (240) (240)
--------- -------------- --------- ------------- --------
Balance at 30
June 2020 - (12) (1,448) (889) (2,349)
Amortisation for
the period - - - (526) (526)
--------- -------------- --------- ------------- --------
Balance at 31
December 2020 - (12) (1,448) (1,415) (2,875)
Amortisation for
the period - - - (790) (790)
Balance at 30
June 2021 - (12) (1,448) (2,205) (3,665)
--------- -------------- --------- ------------- --------
Net Book Value
At 30 June 2020 339 - - 3,502 3,841
--------- -------------- --------- ------------- --------
At 31 December
2020 339 - - 4,076 4,415
--------- -------------- --------- ------------- --------
At 30 June 2021 339 - - 4,607 4,946
--------- -------------- --------- ------------- --------
5. Loss per share
Unaudited Unaudited Audited
Six months Six months Year ended
ended ended 31 December
30 June 30 June 2020
2021 2020
000's 000's 000's
Issued ordinary shares at start
of period 38,811 38,756 38,756
Issued for cash 4,908 - -
Issued in respect of warrants
and options 15 12 19
Weighted average number of
ordinary shares 43,734 38,768 38,775
----------- ----------- ------------
GBP000 GBP000 GBP000
Loss attributable to ordinary
shareholders (GBP000) (3,496) (2,143) (5,746)
Pence Pence Pence
Loss per share
Basic and fully diluted loss
per share (8.0) (5.5) (14.8)
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